Tax
Nov. 3, 2016
Constructive Receipt: A Fundamental Tax Concept
What lawyers should know about timing, tax issues and structured payment of legal fees.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Constructive receipt is a fundamental tax concept that can have a broad and frightening impact. According to the IRS, you have income for tax purposes when you have an unqualified, vested right to receive it. Asking for payment later doesn't change that. Childs v. Comm'r, 103 T.C. 634, 654 (1994), aff'd, 89 F.3d 856 (11th Cir. 1996). The idea is to prevent taxpayers from deliberately manipulating their income.
Classic Example: Year End Bonus
A common scenari...
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